student loans - All posts tagged student loans

Thanks to hefty student loan debts, many millennials will have to wait until 73 to retire, a recent study found. That’s 12 years later than the current average retirement age, 61.

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For them, 73 may be the new 65.

Joseph Egoian, a financial analyst for personal finance website NerdWallet and the author of the study, explains that 73 was the age by which a college graduate with a median amount of student debt and a median starting salary would finally build a big enough retirement portfolio to replace 80% of his peak salary annually. (Also factored in are Social Security benefits beginning at 67, at $11,070 a year.) Read the full report here.

The growing number of baby boomers who are attending divinity schools as part of a turn toward a more spiritual life was the subject of an article I wrote that appeared this week in the Wall Street Journal’s special report on retirement. People over 50 now comprise the fastest growing age group at U.S. divinity schools, where they account for 20% of the student body, up from 12% in 1995. Inspired by that statistic, my article profiled seven people who have taken the plunge, and are now rabbis, ministers, and priests. (Click here for an online supplement to the original article.)

Diocese of Salina

God forgives; student-loan providers don’t.

Boomers are turning to these careers as part of a broader pursuit of meaning and purpose in the second half of life; in all, 1,375 people over 50 graduated from accredited divinity schools in the 2011-12 school year. But those who take this path also potentially face something that can be a side effect of any midlife career change—namely, years of financial uncertainty and sacrifice. Although the Catholic Church typically underwrites tuition, room, and board for its seminarians, most other denominations offer little in the way of financial support. According to Daniel Aleshire, executive director of the Association of Theological Schools (ATS), which accredits U.S. divinity schools, “Students are graduating with more debt than ever.”

Millions of boomers have borrowed money to help pay for their kids’ college educations, and a smaller but still significant cohort has helped their children finance their first homes–even if that means putting their children’s needs ahead of their own retirement plans. But according to a story in today’s Wall Street Journal, many well-meaning parents may be mismanaging their generosity. In a piece titled “12 Debt Myths That Trip Up Consumers,” Rachel Louise Ensign flags two misconceptions that should be of particular interest to supportive parents.

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What paying too much interest leads to.

“You’re too rich for federal student loans.” Federal loans often carry lower interest rates than private loans; in many cases, they don’t even require credit checks or collateral. But Ensign reports that more than 40% of families with income of $100,000 or greater never bother applying for federal financing. Some people in that demographic don’t need the help, of course (and more power to them), but others are simply assuming that their income is too high. In fact, some federal loan programs, including the unsubsidized Stafford Loan, have no income limits for borrowers. Given their competitive rates and more flexible payment plans, advisers tell Ensign, more parents should be exploring those loans before they hit the private market. (The college financing website FinAid has a quick guide to Stafford Loans here.)

About Encore

Encore looks at the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities, needs and priorities of people saving for and living in retirement. Our lead blogger is editor Matthew Heimer, and frequent contributors include editor Amy Hoak, writer Catey Hill, and MarketWatch columnists Elizabeth O’Brien, Robert Powell and Andrea Coombes. Encore also features regular commentary from The Wall Street Journal retirement columnists Glenn Ruffenach and Anne Tergesen and the Director of the Center for Retirement Research at Boston College, Alicia H. Munnell.